Joe Hockey sets himself the lowest of hurdles to save the world

The New York Yacht Club pooh-bahs knew how to set the rules for the America's Cup – to favour themselves. Similarly, a good groundsman prepares a wicket for the home team's benefit and Joe Hockey frames the rules for the local politico-economic game to suit himself with hurdles so low that they're part of the grass.

The Treasurer "committing" Australia to an economic growth rate of 3 per cent merely means getting the economy back to trend – about the minimum a treasurer must aspire to if he hopes to keep his job - as that is what's required just to hold the unemployment rate steady. To reduce the unemployment rate and increase the participation rate, growth of more than 3 per cent is necessary.

Treasurer Joe Hockey speaks to the media at the close of the G20 in Sydney. Photo: Getty

More important for the political game being played with our economic outlook, it's a target that Hockey's advisers are telling him the Australian economy will be achieving before the next election even without major policy change.

That's the benefit of setting the rules: announce a target that you're on track to achieve, achieve it and then announce yourself to be the winner and an economic hero.

Joe Hockey stands in front of G20 finance ministers and central bank governors for the obligatory group photo. Photo: Getty

More bemusing is that 3 per cent already was our baseline target for economic growth. It wasn't an official target, a commitment or, more in keeping with the G20 show, an "aspiration" – it has just been taken for granted. It's what the Reserve Bank and Treasury mean when they talk about getting back to trend, what the nation needs to do.

As previously reported and studiously avoided by the Treasurer, the official family's best guess is that with the present policy settings, the economy will be growing at above trend in 2015/16, just in time for the next election. The Reserve Bank's published central forecast is for a hefty 3.5 per cent growth rate in 2015/16, a figure that seems rather remarkably optimistic given the government's rhetoric. Of course the RBA would be the first to remind everyone that forecasting the economy that far out is a mug's game.

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But it doesn't suit the current political narrative to admit that the economy is already on track. More in keeping with the government's view is (no surprise) The Australian's take on the G20 meeting's so-so communique:

"Joe Hockey will claim an election mandate to embark on contentious economic reforms as part of a global deal struck to spur new growth, starting with action in May to scale back public spending," Rupert Murdoch's local flagship breathlessly reported.

"Calling for urgent action, the Treasurer cited a landmark G20 agreement yesterday as proof of the need for structural reform in Australia as part of an ambitious plan to add $2 trillion to the global economy.

"The comments are aimed at ending any doubt about the government's authority to overhaul outlays on health and welfare, as Mr Hockey insists on the breadth of his mandate to act on economic reform."

Oh please! With all the major and very real obstacles to stronger international growth, only the most naïve or loyal could begin to swallow the idea that any pain promised in the federal budget is for the greater good of the global economy. As someone on Twitter has observed, Australia's greenhouse goals would have proportionately more bearing on global climate change than what tinkering around the edges of our budget will do for global economic growth.

The big international problems are well known – the various shades of protectionism and corruption, the mercantilism in some quarters, sclerotic labour markets in others, a little overly-generous social welfare here, a little too-miserable social welfare there, under-investment in human and physical capital, xenophobic restraints on freedom of movement and the industrial-scale tax avoidance. (No, the Murdoch papers didn't include News Corp's $1.45 billion rorting of the Australian tax system over the past four years when discussing that last bit.)

With all the major and very real obstacles to stronger international growth, only the most naive or loyal could begin to swallow the idea that any pain promised in the federal budget is for the greater good of the global economy

But no harm was done by the vague G20 statement about trying to do better and some good might come of it. It's nice to get some of the austerity-fixated at least thinking about growth more, although the members most in need of a reforming kick are already taking the least notice – for example, India's finance minister saying he did not consider the growth aim binding.

The specific goals mentioned in a pre-meeting IMF paper are worthy, but Treasurer Hockey might not be keen on anyone looking at the fine print. The much-ballyhooed need for easing restrictive employment protection legislation is, in Australia's case, rated as a third-rank priority on a scale of three and expected to have little impact on overall productivity. Turns out that, on a global scale, we're not so bad.

Australia does face various challenges, as all economies do. There are improvements that need making, unnecessary spending that can be trimmed, entitlements that should be reduced (mainly at the upper end) and a more efficient and equitable taxation system to be pursued, starting with ending the blatant rorting. In various speeches, sound treasury secretaries and RBA officials have made the case for reform being necessary to protect and enhance our standard of living.

Unfortunately though, attempts by either side of politics to launch rational reforms are immediately reduced to political games. On the available evidence, it increasingly looks like May's budget preparation, with all its huffing and puffing, is more about politics than economics. Dressing it up further in a supposed cloak of G20 global commitments borders on moving it into farce.

A former economic adviser to the Gillard government, Stephen Koukoulas, argues that Hockey is operating under a political imperative of pulling a surprise 2015/16 surplus out of the hat in time for the next election. The idea would be to demonstrate the Coalition's claimed economic management superiority. Koukoulas reckons the existing policy settings would pretty much do the job anyway, $8.8 billion gifts to the RBA not withstanding, but that's not what the government would like anyone to think.

Thus the Treasurer continues to talk down the Australian economy even when the evidence is looking increasingly positive, the RBA suggests it's turned the corner and when business confidence is still fragile and in need for boosting. There is no Australian "budget crisis", as Joe Hockey termed it last May, but now we have to save the global economy. The G20 is so lucky to have us.